Hearth & Home October 2017

Outdoor living in style by Cedar Springs Landscape Group, Oakville, Ontario.
Photo Courtesy: ©2017 Cedar Springs Landscape Group. www.cedarsprings.net.
Jeff McNeill, McNeill Photography.

Canadian Leaf Patio Business: Weather & Finances

By Tom Lassiter

Fire, rain, long winter, late spring, and an unfavorable currency exchange rate.

“I’ve seen fire and I’ve seen rain.
I’ve seen sunny days that I thought would never end.”

— James Taylor, Sweet Baby James

The same dogged determination that sees Canadians through lengthy winters helped casual furniture retailers across Canada work their way through the 2017 season.

Most retailers interviewed say 2017 hasn’t been a bad year. But they say it hasn’t been a great year, either. Most report sales about on par or a bit better than in 2016.

Weather challenges in the eastern and western provinces can be blamed for hobbling sales at various points in the season. Spring was late in arriving. Ontario endured unusually frequent rains in the first three weeks of August, which thoroughly dampened sales as the season drew to a close. British Columbia was plagued with August forest fires that blocked the sun.

“It’s been a trying season,” said Peter Marshall. With his wife, Sherri, he owns Sherri’s Living Large in Waterloo, Ontario. Spring brought “terrible, pathetic weather” making for “a terrible start.”

“We’ve probably got the highest inventory I can ever remember,” Marshall said in late August, “and we’ve been in business for 15 years.” Sherri’s Living Large also sells interior furnishings, which helped see the store through a tough year. That business, Marshall said, has been “pretty steady.”

Meanwhile, merchants nationwide contended with the ongoing reduced buying power of Canada’s dollar.

“The exchange rate is killing us,” said Jean-Marc Legault, who owns JML, Inc., a retail shop in Lachine, a borough of Montréal.

The last time the Canadian dollar equaled or bested in value the U.S. dollar was in 2013. In January of last year the Canadian dollar hit a low point; Canada’s currency then was worth about 30% less than the U.S. dollar. Globally, business is transacted in U.S. dollars.

Andy Paul, Sun Country Leisure Products.

Over the past 12 months, Canada’s dollar continued to struggle. The value gap closed somewhat in early August, when the differential shrunk to about 20%. If the Canadian dollar holds at that level into the fall and New Year, it will make preseason furniture buys somewhat less painful as merchants prepare for 2018.

“People are accustomed to the low Canadian dollar,” said Andy Paul, owner of Sun Country Leisure Products in St. Catharines, Ontario. “It affects purchases in every kind of store, not just our store. People are just accepting that’s the way it is.”

The economy naturally varies from province to province in a nation as vast as Canada. Calgary, where oil and gas production dominates the economy, has fared less well than more populous and diversified Ontario.

“Our economy’s been good, and we’ve been fortunate,” said Sam Mele owner of InsideOut Patio, who operates six stores in the Toronto area. Mele owns the stores along with his brother, Christopher.

Mele noted that duties on products imported from nations not bound by the North American Free Trade Agreement (NAFTA) have risen to 8% from 5%. That’s an additional cost that must be reflected in the prices consumers pay for casual living products imported from Asia, Europe and other non-NAFTA regions.

Imports to Canada from the U.S. are protected by NAFTA and avoid duties. Freight costs, however, must be paid in U.S. dollars. Canadian merchants importing from the U.S. must pay the extra differential on every shipment. It adds up quickly.

“A lot of big U.S. suppliers don’t recognize that as a cost of doing business,” Mele said. “It would be nice if they were a little more understanding that the stuff costs us 30% more. It does make a difference.”

Canadian forecasters project that the U.S. dollar will continue to be 20% to 28% stronger than its Canadian counterpart for the next few quarters, Mele said. The forecasts are never right, he added, “but usually close. It could always get worse. Let’s hope it doesn’t.”

Here’s a glimpse of how the 2016 casual season played out across Canada.

Rod Boucher, Endless Leisure.

British Columbia

Last winter dragged on longer than normal in the Vancouver suburb of Burnaby. “The season got off to a slow start in my neck of the woods,” said Rod Boucher, owner of Endless Leisure. The shop sells Beachcomber hot tubs and barbecues in addition to casual furniture.

Once spring finally arrived, customers responded. “It’s been great,” Boucher said. Sales overall are up by a single digit over 2016’s performance.

“Fire pits and deep seating are the two top product categories in casual, he said, “no ifs, ands or buts.” Resin wicker is the most popular material. Ratana, which is headquartered nearby, provides his main resin wicker line.

“We can get custom orders in a week and a half, including cushions,” he said. “That’s why we sell so much of it.”

Boucher noted that aluminum continues to sell, especially in dining. Some shoppers still prefer sling seating. Endless Leisure is a Seaside Casual dealer, though the HDPE furniture category “hasn’t taken off like I thought it would,” he said. “Maybe next year.”

June and July sales set records at Crystalview Pool Spa Patio in North Vancouver, said owner Ron Batt. That was good, because the year “started off a little wacko.” Sales remained sub-par in April and May.

Then came August and massive forest fires. “It was like we were in an eclipse,” he said. “The sun, when you could see it, was orange.”

On balance, sales are ahead of last year.

“Furniture sales are good. Fire pit sales are very good,” he said. “It’s been one of the better years we’ve had in hot tubs. It’s good to see.”

This year’s stronger Canadian dollar helped ease the pain of 2016. “Last year,” Batt said, “the margins were brutal.”

Crystalview added Telescope as a vendor this season, which turned out to be a good move. Telescope’s Larssen group, which pairs MGP arms with aluminum frames, has proven to be a winner. “I can’t get over how many of those we sold,” he said.

Batt said he reordered Telescope in August, looking forward to next season and not waiting for Casual Market Chicago. “They offered us a shipping deal, a pretty good discount, and we took advantage of it,” he said.

Patio and Home Direct, in Vancouver.

Patio and Home Direct, in Vancouver, also introduced Telescope products this season. Assistant manager Kitty Cheung said the line is doing “quite well,” noting that Telescope’s MGP tables “have a very modern look” that appeals to the Vancouver market.

Overall, Cheung said, sales are a little ahead of 2016 despite the slow start to the season. “It was quite cold until April,” she said. “We’ve been doing pretty well since then.”

Densely populated Vancouver and its many high-rise condos make smaller-scale furniture especially appealing, she said. Patio and Home Direct moves a lot of Ratana resin wicker dining chairs that are marketed as a contract product. Their small scale makes them perfect for condo balconies, Cheung said.

At Coast Spas Lifestyles in Langley, Sales manager Jon MacAulay said sales are up by 25% for the second year in a row. “People are starting to see the value in spending a few more bucks,” he said.

Coast Spas Lifestyles, a “luxury outdoor living store,” has “been doing a lot with Summer Classics, as well as Patio Renaissance and Woodard.

“Woodard’s been amazing for us this year with some of their single chairs,” MacAulay said. The store often pairs Woodard’s Cortland rockers with OW Lee fire tables. “It’s incredible,” he said.

Lynda Dyck, Beachcomber Hot Tubs Pool & Patio.

Alberta

“Amazing weather” helped make the 2016 season an “exceptional year for furniture” at Beachcomber Hot Tubs Pool & Patio in Lethbridge. “Fire features have been a huge draw,” said Lynda Dyck, who owns the store with her husband, Ron. “We’ve noticed a nice change in volume,” she said, with furniture sales up about $200,000 over last year.

The store’s primary lines include Ebel, Mallin, and OW Lee. The weak Canadian dollar caused the owners to pare down their margins slightly to help make prices more palatable. With Calgary and other casual stores only a couple of hours to the north, Dyck said the store works hard to be price competitive.

The couple have owned the store for 22 years, she said, but didn’t “take patio seriously” until about eight years ago. Manufacturer support this season, she said, has not been as good as in recent years. “Some of it was shipping, some of it was quality, and some of it was lack of response,” she said. Yet, overall, Dyck said, “it’s still positive.”

In Edmonton, where the economy has taken a hit because of lower worldwide petroleum prices, “business has been a little slower than in the past couple of years,” said Brett Belford, manager at Dinette & Patio Furniture.

Even so, the business opened a second location in June.

Fire tables have driven many sales this season, Belford said. A typical ticket for two chairs and a coffee table can run $5,000 to $6,000, he said. Homeowners outfitting an Outdoor Room, he said, “can spend as much as you do on a car.”

Patioline, in Calgary, experienced its first downturn ever in 2016. But sales this season have rebounded to 2015 levels, said Marie Svindt, who owns the shop with her husband, Les.

“We’ve had really good weather this year, compared to last,” she said. “Things are good.”

She noted that umbrella sales are down “because everybody and their dog is selling umbrellas.” Otherwise, teak, aluminum, and stainless-steel furniture are performing well.

Svindt observed that products or groups priced at $10,000 or higher moved a little slower this season. Traditionally, sets priced below $5,000 have never done well at Patioline, and that trend continued. The sweet spot for sales was “anything in the $5,000 to $10,000 range,” she said.

Granville collection from Ebel, with firepit table by OW Lee, at Beachcomber Hot Tubs Pool & Patio.

Saskatchewan/Manitoba

Sales were off a bit at Gould Home Recreation in Regina, Saskatchewan. Terry Gelowitz, patio manager and co-owner, attributed the off year to the provincial economy, which is heavily dependent upon natural resource development.

“Our sales are down a little, but we’ll survive,” he said. “We’ve sold all the inventory right down to the floor. The only problem is, we had to discount it to get rid of it.”

Major vendors include Ebel and Homecrest. “Wicker may have an edge right now,” Gelowitz said, “but metal is still good for us.”

During patio season, 70% of the store’s 5,000 sq. ft. showroom is dedicated to casual furniture. The store also sells billiard and game tables as well as one brand of grills.

“We do a really good business with the Big Green Egg,” he said.

Business was off from 2016 levels at Garden Architecture & Design in Saskatoon, Saskatchewan. Neil Robinson, one of the owners, still characterized sales as good even though “we’re not seeing the double-digit increases that we have every other year.”

The store operates a 10,000 sq. ft. outdoor showroom in downtown Saskatoon during the season. An adjacent indoor showroom offers interior furnishings.

Garden Architecture & Design features casual furniture by Cabana Coast, an importer based in Ontario. OW Lee is represented, as is Treasure Garden.

Winnipeg was blessed with good weather this season, yet casual furniture sales were flat at Krevco Lifestyles. John Bellino is store manager of the 36-year-old business. Other lines include pools and hot tubs, fitness equipment, and hearth products.

Bellino attributed the softness in sales to a lack of disposable income. “I would have expected it to be better because of the weather,” he said.

Mallin is Krevco Lifestyles’ primary furniture vendor, supplemented by “a little Source and a little Kettler.”

In Manitoba, as in most markets, shoppers tend to be most interested in deep-seating furniture. “There’s been an increase in people looking for outdoor lounge,” Bellino said.

A typical ticket for deep seating runs $3,000 to $4,000, he said, while a dining group purchase is usually $2,000 to $3,000.

Colonial collection by Casualife Outdoor Living.

Ontario

Casualife Outdoor Living, which operates two stores in greater Toronto, more than doubled the size of its Missasauga store by moving to a new location.

“It’s a great space with beautiful 20 ft. ceilings,” said Jill Schwartzentruber, business manager and part owner. “It’s done very well. It’s been a very good year,” despite a late start because of the weather.

The new store contributed to an overall growth in sales, she said.

Casualife Outdoor Living has moved away from displaying matched sets to a more eclectic presentation, mixing furniture from different groups and vendors.

“Now we pride ourselves on offering a lot of different pieces that are visually appealing,” she said. “It adds interest and character.”

Schwartzentruber said teak sales are up, thanks to “the trend of everything being so organic.” Teak also blends well, she said, with other materials. “We mix maybe three different lines to create an overall look,” she said.

Sales tickets at Casualife Outdoor Living often range between $5,000 and $15,000, she said.

Peter Marshall with his wife, Sherri, owns Sherri’s Living Large in Waterloo. The shop has suffered through Ontario’s lousy 2017 weather. Marshall was hopeful that some good September weather would help reduce the product backlog. Major lines at Sherri’s Living Large include Ebel, Cabana Coast, and CR Plastics.

“It’s been a trying season,” he said.

After a cold, wet spring, “the summer never really got hot,” said Andy Paul, owner of Sun Country Leisure Products in St. Catharines. “Sales were slow to start,” he said. “We made up for it to a certain extent in June, but it’s been kind of flat since.”

Sam Mele, InsideOut Patio.

Sun Country’s vendors include Cabana Coast, Erwin & Sons, Hanamint, and CR Plastics. A new line of grills from Weber helped boost interest in that side of the business, he said, but barbecue products “didn’t get going as they should. So we’re down a bit” in grills.

Overall, he said, sales could be off a bit from 2016 levels.

Sam Mele of InsideOut Patio said the season’s best weather came at the end of August. “We suffered through the rain this year. It’s rained 25% more than average.”

Anything to do with shade, he said, was off “because there was no sun. We have TUUCI and Treasure Garden.”

Mele noted products from CR Plastics sold surprisingly well to city dwellers, a first in his experience. The heavy, maintenance-free furniture usually ends up going to “cottagers and the people up north” in the lake country.

Despite the cruel weather, Mele expected InsideOut’s sales to be up. “Our economy’s been good” in Ontario, he said. “We’ve been fortunate that way.”

Ontario’s foul weather didn’t slow sales at Toja Furniture, which operates retail stores in Oakville and Milton, with a partner store in Nepean.

Toja deals directly with Asian manufacturers to “keep the cost lower and control what we sell,” said owner Jack Styrk.

“We keep it very simple,” he said. Toja uses one color of extruded resin for its weaves. Sunbrella cushion fabrics are limited to three colors. “Keep it simple; keep it good,” he said.

Styrk said the company will land 50 containers of casual furniture this year. The company sells through Amazon and will be in Canadian Home Depot and Lowe’s stores next year.

Seven-year-old Toja has been doubling sales each year, and this year should be no different. “It’s been successful so far,” Styrk said. “Pretty cool.”

Jean-Marc Legault, JML, Inc.

Québec

JML, Inc. is a casual furniture store in Montréal’s Lachine district. Making a go of it as an independent patio store is tough in that province, said owner Jean-Marc Legault. He cited several reasons, including the presence of powerful chain stores, such as Trevi and Club Piscenes. Major building supply outfits also sell patio furniture. The short season, coupled with Québec’s laws stipulating that all information must be provided in French as well as English, create an environment that is unfriendly to startups and small businesses.

“It is simply too hard to generate business enough to advertise so people know you,” he said. “I’m convinced that to have a storefront, you need about $1.5 million in sales.”

Legault’s casual business currently generates less than $1 million he said, and the majority of that is in contract sales.

JML offers products from Cabana Coast, Ratana, Telescope, Jensen Leisure, Woodard, and TUUCI. “We put a lot of manufacturers on our website,” he said, “because we only do special orders.”

Legault previously worked as a casual sales representative in Québec, presenting product lines from Telescope and Hammock Source. He eventually had to give up being a sales rep “because there’s no room for specialty dealers” in Québec. He says he couldn’t make a living relying solely on commissions.

Legault supplements his casual furniture income with a separate business that sells tarps.

Westmount dining (foreground) and Bretton Slim Chair with side table (background) at Toja Patio Furniture.

Nova Scotia

Thornbloom, founded in 1990 by Debbie Morgan and Elaine Shortt, started as a home décor and interior furnishings store. The owners added outdoor furniture about five years ago.

Casual furniture accounts for about 30% of sales, Morgan said. “We feel there’s room to grow.” An average ticket for patio furniture starts at about $2,000, she said.

Thornbloom carries products by Cabana Coast and CR Plastics, both of which are Canadian companies. Many of Thornbloom’s customers are furnishing cottages and vacation homes in scenic Nova Scotia.

“Depending on where people live, we have a lot of high winds,” Morgan said. “Some people prefer to go with plastic because of its weight.”

Most of all, she said, shoppers are looking for ease of maintenance and longevity. “That’s one of the benefits of CR Plastics,” she said. “It can be left outside and wiped off. People enjoy that.”

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